Perhaps the most common and expensive mistakes that sellers on Amazon make is not taking inventory management seriously enough. Running out of inventory at the wrong time can cause your hard-earned ranking to be wiped out in an overnight operation. Conversely, overstocking your inventory may cause expensive storage fees that may even kill your profitable business.
What is Amazon Inventory Management?
Amazon inventory management refers to the management, planning, and control of your product inventory in order to ensure that you maintain the right amount of inventory at the right time. At BizisTech, we consider inventory management as an important strategic aspect of your business.
What Is Amazon Inventory Management?
Amazon inventory management refers to the entire process of keeping tabs on your stock, forecasting, replenishment, and keeping your stock healthy for all of your Amazon listings.
For those sellers that sell through Fulfillment by Amazon, it also includes Amazon storage capacity, avoiding long-term storage fees, and successfully managing stranded inventory. Each decision related to your inventory has a direct correlation with your bottom line, ranking, and overall Amazon Account Management.
Why Amazon Inventory Management Is Critical for Sellers
When poor inventory management happens, it creates a chain reaction of problems, affecting every aspect of your Amazon business:
Stockouts Kill Rankings
Stockouts Kill Rankings: When you are out of stock on an item, it goes into inactive status or loses the Buy Box. Amazon immediately starts demoting your ranking because it cannot fulfill the orders. It can take weeks of advertising dollars to regain those lost rankings, costing significantly more than it would have taken to stay in stock in the first place.
Overstocking Drains Cash Flow: If there is too much inventory going in, Amazon charges a monthly storage fee. If inventory is in Amazon’s warehouse over 365 days, Amazon charges long-term storage fees. These fees can add up quickly.
IPI Score Impact: Amazon tracks how well you are managing your inventory in Amazon’s Fulfillment Centers using an inventory performance index, also known as an IPI score. If your IPI score is low, Amazon may impose inventory limits on your account. This limits the amount of inventory that can be sent to Amazon’s warehouse.
Customer Experience: Having consistent inventory availability is important in gaining customer trust and loyalty. If inventory is not consistent, customers may get frustrated and buy other products that are in stock.
Key Components of Effective Amazon Inventory Management
Our strategy with regard to Amazon inventory management includes all the essential elements of effective inventory management:
Demand Forecasting: Demand forecasting is the backbone of effective inventory management. We carefully review your sales history, seasonal trends, market growth trends, and upcoming promotions to effectively estimate the amount of inventory that will be needed and when the need will arise.
Reorder Point Planning: We set the reorder points for each item based on your average sales rate, the lead time from the supplier, and the desired safety stock level. This way, the orders are made at the perfect time – not before or after the need arises.
FBA Shipment Management: FBA shipment creation is a detailed process that needs careful attention to Amazon’s packaging, labeling, and shipment creation guidelines. Our team is dedicated to taking care of the entire FBA shipment creation process, ensuring that your products reach Amazon’s warehouses on time.
Stranded Inventory Management: Stranded inventory is the products that Amazon has in their warehouses without an active listing. These products occupy space, leading to additional storage charges without any sales revenue generated. Our team is dedicated to ensuring that stranded inventory is addressed, keeping your storage charges under control.
Seasonal Inventory Planning: Products may receive a boost in sales during peak seasons, such as Q4, Prime Day, or holiday seasons. Seasonal planning is crucial in ensuring that the products are not left with massive overstocking when the peak season ends.
Multi-Warehouse Distribution: Amazon has multiple warehouses that store FBA products, ensuring that products are not far from the customers, hence reducing the delivery time. Understanding the distribution of FBA products is crucial in determining the shipment quantities, hence avoiding unexpected storage fee charges.
Tools for Amazon Inventory Management
Professional Amazon inventory management is supported by a range of powerful tools:
Amazon’s Inventory Dashboard: Seller Central’s built-in inventory tools provide real-time data on stock levels, days of supply, and reorder recommendations.
Helium 10 Inventory Management: Offers demand forecasting and reorder alerts based on your sales velocity data.
Skubana and Linnworks: Third-party inventory management platforms that provide advanced multi-channel inventory tracking and automation.
RestockPro: Specifically designed for FBA sellers to manage reorder points and supplier relationships efficiently.
How Inventory Management Connects to Amazon Account Management
This, in turn, has a direct bearing on your rankings, advertising efficiency, storage fees, and account health. A good inventory system ensures that your listings remain active, your rankings remain optimal, and your profit margins remain healthy.
This is why Amazon Inventory Management is a key aspect of effective Amazon Account Management. At BizisTech, we ensure that every aspect of your Amazon account is integrated with Inventory Management, ensuring that your business never hits a roadblock due to avoidable Inventory Management blunders.
Let BizisTech Handle Your Amazon Inventory Management
This is one of the areas where keeping on top of things at all times can make a tremendous difference to your bottom line.
We at BizisTech are the ones who can help manage your inventory effectively, avoid costly stockouts and overstock scenarios, and keep your Amazon account performing at its best throughout the year.
Are you ready to eliminate the headaches associated with inventory management? Check out our comprehensive Amazon Account Management options and let BizisTech take care of keeping your Amazon business stocked, ranked, and thriving!
FAQs — Amazon Inventory Management
Q1. What is Amazon inventory management? Amazon inventory management is the process of monitoring stock levels, forecasting demand and planning replenishment to ensure your products are always available for purchase.
Q2. What is an IPI score on Amazon? The Inventory Performance Index or IPI score measures how efficiently you manage your FBA inventory and a low score can result in Amazon placing storage limits on your account.
Q3. What happens when I run out of stock on Amazon? Running out of stock causes your listing to go inactive or lose the Buy Box and Amazon’s algorithm immediately begins demoting your organic search rankings.
Q4. What is stranded inventory on Amazon? Stranded inventory refers to products stored in Amazon fulfillment centers that have no active listing meaning they generate storage fees without producing any sales revenue.
Q5. How do I calculate how much inventory to send to Amazon FBA? Calculate your average daily sales rate, multiply by your desired days of supply, and add a safety stock buffer to account for supplier delays and unexpected demand spikes.
Q6. What are Amazon long term storage fees? Amazon charges long term storage fees for inventory that has been in their fulfillment centers for more than 365 days making it essential to avoid overstocking slow moving products.
Q7. How does seasonal demand affect Amazon’s inventory planning? Seasonal peaks like Q4 and Prime Day require significantly more inventory than normal periods so advance planning and early shipments are essential to avoid missing peak sales opportunities.
Q8. Can poor inventory management hurt my Amazon PPC performance? Yes, running out of stock while running PPC campaigns wastes your ad budget entirely since clicks on your ads cannot convert into sales when your product is unavailable.
Q9. How does inventory management connect to Amazon account management? Inventory management directly impacts rankings, advertising efficiency, storage costs and account health making it a critical component of overall Amazon account management strategy.
Q10. How can BizisTech help with Amazon inventory management? BizisTech provides comprehensive inventory management including demand forecasting, reorder planning, FBA shipment management and stranded inventory resolution to keep your business running smoothly.
